Vlerick Leuven Gent Working Paper Series 2007/03 ... - Vlerick Public
Vlerick Leuven Gent Working Paper Series 2007/03 ... - Vlerick Public
Vlerick Leuven Gent Working Paper Series 2007/03 ... - Vlerick Public
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However, up to date the concept of diversity is a rather unexplored domain in<br />
empirical board research (Carter et. al., 2002). In contrast, research on diversity in other<br />
settings has a long-standing history. Although the issue of diversity has not been approached<br />
in a uniform way, two streams have been identified that influence the way diversity is<br />
conceptionalized. One stream of research approaches diversity from a moral-ethical<br />
perspective and focuses on the social inequity in order to identify discriminatory practices in<br />
the workplace. A second research stream studies diversity from an organizational and<br />
economical perspective in order to examine the effects of diversity on work-related outcomes<br />
(Janssens and Steyaert, 20<strong>03</strong>). Especially the latter points out robust relationships which can<br />
to some extent be extrapolated to the context of boards of directors.<br />
Diversity among board members is assumed to improve debate due to the obvious<br />
reason that diversity is commonly associated with different life experiences and hence diverse<br />
perspectives (Eisenhardt et.al., 1997). In fact, research on group heterogeneity suggests that<br />
creativity is positively related to skill-based heterogeneity because diverse perspectives can<br />
produce and consider a broad array of solutions and decision criteria (Schweiger et.al., 1986).<br />
This is of particular relevance when groups are confronted with complex, non-routine tasks, as<br />
it is the case with boards of directors. From a different point of view, research has also shown<br />
that board members who are in a minority position have the potential to provide unique<br />
perspectives and challenge the conventional wisdom among the majority in the board<br />
(Westphal and Milton, 2000). For example, when the majority of board members represents a<br />
particular functional background (e.g. finance), the opinion expressed by a board member<br />
with a different background (e.g. marketing) may shed another light on the topic, and hence,<br />
change the discussions.<br />
Although the results of empirical research on the cognitive capacity of groups are<br />
consistently positive (see the reviews by Milliken and Martins, 1996 and Williams and<br />
O’Reilly, 1998), if boards become too diverse, debate may be hampered by difficulties in<br />
understanding of alternatives, attributable to differences in language or background (Pelled,<br />
1996). Board members with the same background share a language which reflects similarities<br />
in interpreting, understanding and responding to information. Directors who are not familiar<br />
with this shared language may find it difficult to communicate (Zenger and Lawrence, 1989).<br />
In addition, heterogeneous boards have a greater potential for disputes (Goodstein et.al.,<br />
1994), are less able to agree on means and objectives (Golden and Zajac, 2001) and by<br />
consequences, it may be difficult to research consensus.<br />
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